THE COSTS OF NONTARIFF BARRIERS TO TRADE - EVIDENCE FROM NEW-ZEALAND

Recent work on trade policy with imperfect competition indicates that the adverse effects of non-tariff barriers to trade exceed those sugge sted by traditional theory. With market power in foreign supply, setti ng a restrictive non-tariff barrier will induce foreign exporters to r aise their supply prices. The authors use the experiment provided by t he comprehensive New Zealand economic reforms of the mid-1980s. Using panel data on export unit values from Germany and the United States to several destinations including New Zealand, they find some evidence f or decreased export prices to New Zealand as a result of the dismantli ng of non-tariff barriers to trade.